Opinion
MDL No. 1409, M 21-95, 03 Civ. 2843 (WHP).
July 22, 2005
Sheldon V. Burman, Esq., Sheldon V. Burman, P.C., New York, Counsel for Plaintiff.
Theodore R. Scarborough, Esq., Sidley Austin Brown Wood LLP, Chicago, Illinois, Counsel for Defendant.
AMENDED MEMORANDUM AND ORDER
This class action concerns foreign currency conversion fees imposed by defendant Citibank (South Dakota), N.A. ("Defendant" or "Citibank") on its credit cardholders. Plaintiff Gilbert Schrank ("Plaintiff" or "Schrank") asserts claims pursuant to New York consumer protection statutes and the common law of New York and other states.
Plaintiff moves for reconsideration of this Court's Memorandum and Order, dated December 2, 2004, certifying a class of New York state residents suing under the New York Personal Property Law. For the reasons set forth below, Plaintiff's motion is granted in part and denied in part.
BACKGROUND
The relevant facts are described in detail in this Court's prior Memoranda and Orders. See Schrank v. Citibank (South Dakota), N.A., No. 03 Civ. 2843, 2004 WL 2750091 (S.D.N.Y. Dec. 2, 2004); Schrank v. Citibank (South Dakota), N.A., No. 1409, 21-95, 2003 WL 22097502 (S.D.N.Y. Sept. 10, 2003); see also In re Currency Conversion Fee Antitrust Litig., No. 1409, 21-95, 2005 WL 1405993 (S.D.N.Y. June 16, 2005) ("Currency Conversion IV"); In re Currency Conversion Fee Antitrust Litig., 361 F. Supp. 2d 237 (S.D.N.Y. 2005) ("Currency Conversion III"); In re Currency Conversion Fee Antitrust Litig., 224 F.R.D. 555 (S.D.N.Y. 2004) ("Currency Conversion II"); In re Currency Conversion Fee Antitrust Litig., 265 F. Supp. 2d 385 (S.D.N.Y. 2003) ("Currency Conversion I").Schrank asserts six claims in his Complaint: (1) violation of New York Personal Property Law ("NYPPL"), Article 10, § 413(3)(a); (2) violation of New York General Business Law § 349 ("Section 349"); (3) common law fraud; (4) unconscionable fees under the common law and UCC § 2-202; (5) violation of the duty of good faith and fair dealing pursuant to common law and UCC § 1-203; and (6) unjust enrichment. Following the removal and transfer of this action to this Court, Plaintiff sought certification of two classes, a New York class for New York statutory claims and a national class for common law claims. This Court certified a New York class consisting of "[a]ll New York State residents issued Citibank, Visa or MasterCard credit cards who did not agree to arbitrate their claims and were assessed a foreign currency conversion fee in violation of the New York Personal Property Law." Schrank, 2004 WL 2750091, at *9.
Schrank moves for reconsideration arguing that this Court should have certified a New York class with respect to all claims. (Plaintiff's Memorandum in Support of Motion for Reconsideration ("Pl. Mem.") at 4-10.) In addition, Schrank contends that a national class is appropriate for his claims of breach of good faith and fair dealing and unjust enrichment. (Pl. Mem. at 10-12.) Plaintiff also asserts that Citibank has waived its right to compel arbitration by litigating the action in this forum and benefiting from discovery not available in arbitral proceedings. (Pl. Mem. at 12-17.)
Defendant counters that Plaintiff's motion is an improper attempt to reargue issues that this Court has already decided and raise new arguments not addressed in the initial motion papers. (Defendant's Memorandum in Opposition to Reconsideration ("Def. Mem.") at 2-3.) Citibank also contends that it has not waived its right to compel arbitration. (Def. Mem. at 7-8.)
DISCUSSION
I. Motion for Reconsideration Standard
"A motion for reconsideration should be granted only where the moving party demonstrates that the Court has overlooked factual matters or controlling precedent that were presented to it on the underlying motion and that would have changed its decision."Colodney v. Continuum Health Partners, Inc., No. 03 Civ. 7276 (DLC), 2004 WL 1857568, at *1 (S.D.N.Y. Aug. 18, 2004) (internal quotation marks and citation omitted). Such a motion "should not be granted where the moving party seeks solely to relitigate an issue already decided." Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995). Indeed, reconsideration is not an opportunity to take "a `second bite at the apple' for a party dissatisfied with a court's ruling." Pannonia Farms, Inc. v. USA Cable, No. 03 Civ. 7841 (NRB), 2004 WL 1794504, at *2 (S.D.N.Y. Aug. 10, 2004). In addition, "a motion for reconsideration cannot assert new arguments or claims which were not before the court on the original motion." Koehler v. Bank of Bermuda, Ltd., No. M18-302 (CSH), 2005 WL 1119371, at *1 (S.D.N.Y. May 10, 2005); accord Am. Hotel Int'l Group v. OneBeacon Ins. Co., No. 01 Civ. 0654 (RCC), 2005 WL 1176122, at *1 (S.D.N.Y. May 18, 2005). Under Local Rule 6.3, "[t]he standard for granting such a motion is strict, and reconsideration will generally be denied unless the moving party can point to controlling decisions or data that the court overlooked."Shrader, 70 F.3d at 257. Whether reconsideration is appropriate is "within the sound discretion of the district court."Colodney, 2004 WL 1857568, at *1.
II. Class Certification
Plaintiff does not point to any "controlling decisions or data" that this Court overlooked in rendering its class certification decision. Instead, Schrank reiterates arguments previously addressed by this Court or presents entirely new arguments, both impermissible grounds for reconsideration.
This Court considered and rejected Plaintiff's argument with respect to certification of his Section 349 claim. That section requires proof of causation, which this Court previously concluded "entails individual inquiries" not appropriate for class certification under Rule 23(b)(3). See Schrank, 2004 WL 2750091, at *6-7. In addition, this Court held that Plaintiff's claims were not typical of the claims of other class members. Schrank's claims may be subject to certain defenses not applicable to the rest of the class and as such, unique and ineligible for class certification under Rule 23(a)(3).Schrank, 2004 WL 2750091, at *4.
Similarly, this Court previously decided that Schrank's unjust enrichment claim is not amenable to national class certification. Variations in the laws of fifty different states eviscerate any common issues that may exist in this regard. See Schrank, 2004 WL 2750091, at *7-8.
Because Schrank cannot demonstrate that this Court overlooked any determinative matters or controlling decisions, his motion on the Section 349 and unjust enrichment claims is denied as an impermissible attempt to take a second bite at the apple. See United States Underwriters Ins. Co. v. Falcon Constr. Corp., No. 02 Civ. 4179 (KTD), 2005 WL 497792, at *1 (S.D.N.Y. Mar. 3, 2005) (reconsideration inappropriate upon mere disagreement with ruling); Colodney, 2004 WL 1857568, at *2 (reconsideration not opportunity to rehash previously asserted arguments).
Schrank also impermissibly advances two new arguments in support of reconsideration. First, he contends that his good faith claim qualifies for national class certification as a breach of contract claim. (Pl. Mem. at 10-12.) To buttress that novel argument, Plaintiff attaches a survey reflecting the uniform elements of a breach of contract claim across the United States. (Pl. Mem., Ex. 1.) Second, Schrank proposes certification of a New York class encompassing both statutory and common law claims. (Pl. Mem. at 8-10.)
Reconsideration is not open season for new argument. See Koehler, 2005 WL 1119371, at *1 (Local Rule 6.3 implicitly provides that new arguments may not be asserted on reconsideration); Pannonia Farms, Inc, 2004 WL 1794504, at *3 (reconsideration "is not occasion for a party to craft new and previously untested legal theories"). Indeed, the narrow scope of reconsideration under Local Rule 6.3 is necessary "to ensure finality and prevent the rule from becoming a vehicle by which a losing party may examine a decision `and then plug the gaps of a lost motion with additional matters.'" Valentine v. Met. Life Ins. Co., No. 85 Civ. 3006 (CSH), 2005 WL 1278524, at 2 (S.D.N.Y. May 31, 2005) (quoting Carolco Pictures, Inc. v. Sirota, 700 F. Supp. 169, 170 (S.D.N.Y. 1988)); accord Am. Hotel, 2005 WL 1176122, at *1.
III. Arbitration
Finally, Schrank asserts that this Court did not consider his argument that Citibank waived its right to compel arbitration. (Pl. Mem. at 12-14; Plaintiff's Reply Memorandum in Support of Reconsideration ("Pl. Reply Mem.") at 1-3; Plaintiff's Supplemental Response Memorandum in Support of Class Certification ("Pl. Supp. Mem.") at 1-5.) Following the grant of class certification in this case, this Court had occasion to consider whether Citibank waived its arbitration rights in MDL No. 1409 (the "MDL Proceeding"). See Currency Conversion III, 361 F. Supp. 2d at 257-58. For the same reasons that Citibank waived its right to compel arbitration in the MDL Proceeding, Citibank has waived its right here.
As this Court explained in Currency Conversion III, "a party may impliedly waive its right to enforce a contractual arbitration clause when it `engages in protracted litigation that results in prejudice to the opposing party.'" 361 F. Supp. 2d at 257 (quoting S R Co. of Kingston v. Latona Trucking, 159 F.3d 80, 83 (2d Cir. 1998) and citing Manos v. Geissler, BRG, 321 F. Supp. 2d 588, 593 (S.D.N.Y. 2004)). In determining whether a party has waived its arbitration rights, courts consider the following factors: "(1) the time elapsed from the commencement of litigation to the request for arbitration; (2) the amount of litigation (including the exchanges of pleadings, any substantive motions, and discovery); and (3) proof of prejudice, including taking advantage of pre-trial discovery not available in arbitration, delay, and expense." Coca-Cola Bottling Co. of N.Y., Inc. v. Soft Drink Brewery Workers Union Local 812, 242 F.3d 52, 57 (2d Cir. 2001) (internal quotation marks and citation omitted). This inquiry is individualized and turns on the particular facts of each case. See Thyssen, Inc. v. Calypso Shipping Corp., 310 F.3d 102, 104-05 (2d Cir. 2002); Cotton v. Slone, 4 F.3d 176, 179 (2d Cir. 1993).
In Currency Conversion III, this Court concluded that Citibank waived its arbitration rights based on its delay in asserting those rights and the advanced stage of the MDL Proceeding. 361 F. Supp. 2d at 257-58. Citibank has similarly waived its right to compel arbitration in this case. First, likeCurrency Conversion III, Citibank never moved to compel arbitration in this action. Second, Defendant elected to proceed in a federal forum when it removed this case from the state court in 2002. (Notice of Removal, dated Dec. 11, 2002.) For more than two years, Citibank has defended this action and availed itself of discovery coordinated with the MDL Proceeding. (Defendant's Memorandum in Opposition to Remand; Answer; Pl. Supp. Mem. at 3; MDL Scheduling Order No. 6, dated October 10, 2003; Conference Tr., dated September 16, 2003 at 31-32.) Finally, discovery is now closed and the parties are briefing a dispositive motion.
Citibank's argument that it raised arbitration in its Answer and therefore did not waive its arbitral rights is unavailing. (Def. Mem. at 7.) "The proper way for a defendant to assert an entitlement to arbitration is by way of motion, not by pleading it as an affirmative defense or a counterclaim in his answer." Manos, 321 F. Supp. 2d at 595.
Thus, Citibank has "actively litigated" this case and secured pretrial discovery, an avenue often closed to arbitrating parties. Cotton, 4 F.3d at 179-80; accord Apollo Theater Found., Inc. v. W. Int'l Syndication, No. 02 Civ. 10037 (DLC), 2004 WL 1375557, at *3-4 (S.D.N.Y. June 21, 2004). Having reaped the benefits of litigating in this forum, Schrank would be unfairly prejudiced if Citibank was permitted to exercise its arbitral rights at this late stage. Accordingly, Citibank has waived its right to compel arbitration.
CONCLUSION
For the reasons set forth above, Schrank's motion for reconsideration is granted in part and denied in part. To the extent reconsideration is granted, this Court holds that Citibank waived its right to compel arbitration and modifies the class previously certified as follows:
All New York state residents issued Citibank Visa or MasterCard credit cards who were assessed a foreign currency conversion fee in violation of the New York Personal Property Law.
SO ORDERED.